ALEX SALMOND and David Cameron today sealed a deal to grant the Scottish Government the power to hold a referendum on independence.

The Prime Minister and Scotland's First Minister signed the agreement setting out the terms of the referendum during a meeting at the Scottish Government headquarters at St Andrews House.

The deal, which has been dubbed "The Edinburgh Agreement", follows months of negotiations.

Private meetings between the two governments have covered contentious issues about the question on the paper.

Proposals for a second question on further devolution or 'devo-max' were firmly opposed by the UK Government.

But agreement was struck to allow 16 and 17 year olds to take part in the ballot.

Negotiations between the governments were led by Deputy First Minister Nicola Sturgeon and Scottish Secretary Michael Moore.

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Following the meeting in Edinburgh, Salmond said: "It paves the way for the most important decision our country of Scotland has made in several hundred years.

"It is, in that sense, an historic day for Scotland and a major step forward in Scotland's home rule journey."

The First Minister said securing an agreement on the process of the referendum meant there would be "respect" for the outcome "whatever it is". It also allows the SNP to now deal with the "substantive" arguments involved in devolution, he added.

He added: "Do I believe that independence will win this campaign? Yes, I do. I believe we'll win it by setting out a positive vision for a better future for our country economically and also, crucially, socially."

Today's agreement states that the governments at Holyrood and Westminster have "agreed to work together to ensure that a referendum on Scottish independence can take place".

It states: "The governments have agreed that the referendum should have a clear legal base; be legislated for by the Scottish Parliament; be conducted so as to command the confidence of parliaments, government and people; and deliver a fair test and decisive expression of the views of people in Scotland and a result that everyone will respect."

It notes that the governments have agreed to promote an Order in Council under Section 30 of the Scotland Act to allow a single question referendum on Scottish independence to be held before the end of 2014. The Order "will put beyond doubt that the Scottish Parliament can legislate for the referendum".

The agreement, signed by the Prime Minister, First Minster, Scottish Secretary Michael Moore and Deputy First Minister Nicola Sturgeon goes on: "It will then be for the Scottish Government to promote legislation in the Scottish Parliament for a referendum on independence.

"The governments are agreed that the referendum should meet the highest standards of fairness, transparency and propriety, informed by consultation and independent expert advice.

"The referendum legislation will set out the date of the referendum; the franchise; the wording of the question; rules on campaign financing; and other rules for the conduct of the referendum."

Speaking after signing the deal, Mr Cameron said: "I always wanted to show respect to the people of Scotland.

"They voted for a party that wanted to have a referendum. I've made that referendum possible and made sure it's decisive, it's legal and it's fair, and I think that's right for the people of Scotland."

Asked what he gets back when he has given Mr Salmond control of both the date and who votes, he replied: "What we have is what I always wanted, which is one single question, not two questions, not devo max, a very simple single question that has to be put before the end of 2014 so we end the uncertainty, we put beyond doubt Scotland's position either within the United Kingdom, as I hope, or separating itself from the United Kingdom, one single simple question.

"That for me was always the key. Now we've dealt with the process, now we should get on with the real argument, and I passionately believe Scotland will be better off with the United Kingdom but also crucially the United Kingdom will be better off with Scotland.